Hyundai has been rocked by a slush fund scandal

Results for the first three months of 2006 showed a drop in net profit to 319bn won ($341m; �185m) from 510bn won a year earlier.

The Korean firm blamed the dip on higher parts prices and a stronger won denting the value of overseas sales.

Its chairman was last week arrested over the scandal at the firm.

Chung Mong-Koo and Hyundai are accused of creating slush funds to pay politicians and officials for business favours.

Scandal impact

While Hyundai's first quarter net profit missed market expectations of 473bn won, its shares actually rose 3%, as its operating profit was better than expected.

Its operating profit for the period was 335bn won, beating market forecasts of 313bn won.

Looking forward, analysts said it remained to be seen how Hyundai would cope with the ongoing scandal at the firm.

"It's inevitable that Hyundai will experience some impact [from the arrest of its chairman] for a while since there'll be a vacuum in management," said Nam Kyung-moon, an analyst at Hanwha Securities.

"But we believe it won't take long before things are brought back to normal."